Alabama pension fund boss David Bronner said the state's lack of public revenue threatens its future as a productive and orderly economy, while Middle East tensions might drive oil to $300 a barrel this year.

The head of the Retirement Systems of Alabama, the pension plan for 300,000 active and retired state workers, said it is too late to save the state budget by reducing expenses.

"You can't cost cut your way out of General Fund problems when you have always run it on the cheap," Bronner said. "Government will cease to function, and that means courts, education, youth services and public safety."

Bronner has said before that Alabama taxes will have to rise substantially by 2011 to avert a financial meltdown, probably on real property, a theme he cited during a July 2009 speech in Tuscaloosa.

Alabama has the lowest personal and business taxes in the country, even when adjusted for household income, according to the U.S. Bureau of Economic Analysis. Advocates of low taxes say that stimulates business investment; opponents say the rich benefit while everyone else suffers with poor schools, cracked roads and long lines at the Department of Motor Vehicles.

Debate aside, Bronner's most recent alarming predictions came last week at a meeting of the Birmingham Bar Association in Prattville. It was attended by private lawyers, government prosecutors and state judges.

"As a group, they aren't accustomed to people telling them how things really are," Bronner said in an interview Wednesday.

He admitted that his optimism is low. When asked if the rate of decline he envisions means Alabama devolves into a Third World wasteland, he replied: "Yes. Only with Third World countries, the expectations aren't very high to begin with."

Time is short, Bronner said. While opinions vary, the gloomiest projections out of Montgomery are for spending in the next fiscal year for both the Education Trust Fund and the General Fund to outstrip available money by $1 billion.

Don't count on gambling or electronic bingo, Bronner said, to pull any financial miracles. Both are under heavy discussion during the current legislative session in Montgomery. Bronner said it's like arguing about getting a new roof on the house as a tornado bears down.

"Gambling and bingo are nickel and dime," he said. "They won't solve the problem, but they sure divert attention away from it."

Schools may close

Trouble will happen by the time school starts, said Bronner, who has led the RSA for 37 years. School district superintendents will start cutting programs, class offerings and teachers. Entire schools will close. Thousands of teachers will be released, he said. State troopers will stop enforcing speed laws and contract disputes between businesses will take forever to wend their way through a deserted court system strapped for judges, clerks and stenographers.

"Maybe the troopers can stand by the roadside and wave," Bronner said. "If you stop, you get a ticket, if not, see you later."

Bronner also said the global economy is threatened by Iran's nuclear ambitions in the Middle East. He said unless other nations become satisfied Iran will not pursue a nuclear weapons program, Israel will attack. He said that will force oil to $300 a barrel, from less than $100 now, and cause world stock markets to plunge.

"To me, Israel has no choice, they will have to strike if there is no agreement," Bronner said. "The people in Iran are smart and educated, but they have never had a leadership they could rein in."

The economy won't be able to handle it, Bronner said.

"With oil at $300 a barrel, the U.S. economy sputters to a halt and the stock market is crushed."

Bronner said similar budgetary conditions prevailed in Alabama during the 1970s, when he first took over at the agency which invests money to pay for the pensions of public employees. No one listened then, he said, and nobody paid any price for it. Shortly after, massive oil discoveries in the Gulf of Mexico sent mounds of cash cascading into state coffers.